Rule Change: Open

Overview

This proposed rule change from Dr Kerry Schott AO seeks to change the National Electricity Rules so they no longer prevent transmission and distribution network businesses from submitting a contingent project application to the Australian Energy Regulator (AER) in the 90 business days before the end of a regulatory year, except where that regulatory year is the last year of a regulatory control period.
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This proposed rule change from Dr Kerry Schott AO seeks to change the National Electricity Rules so they no longer prevent transmission and distribution network businesses from submitting a contingent project application to the Australian Energy Regulator (AER) in the 90 business days before the end of a regulatory year, except where that regulatory year is the last year of a regulatory control period.

Consultation paper

On 7 March 2019 the Australian Energy Market Commission (AEMC) published a consultation paper for the Application period for contingent project revenue rule change request. 

Clauses 6.6A.2(b)(1) and 6A.8.2(b)(1) of the NER prohibit a distribution network service provider (DNSP) and a transmission network service provider (TNSP), from submitting a contingent project application within 90 business days prior to the end of a regulatory year.

The restiction exists to allow time for the costs of a project to be included in the allowed revenue which is set on a year by year basis. The proposed changes remove the need for the restriction by clarifying that the costs, if approved by the AER, would be recovered from consumers in the second  regulatory year after the application is submitted if the submission is made in the last 90 days of the regulatory year. It therefore only changes the time at which the AER could assess the application, it does not change when the costs associated with the application would be recovered from consumers. 

The existing 90 business day restriction may delay the time at which DNSPs and TNSPs get certainty as to revenue recovery for time critical contingent projects.

The rule change request seeks to amend the relevant clauses so:

  • a contingent project application can be submitted any time, except in the last 90 days of a regulatory control period, but
  • any incremental revenues approved by the AER for a contingent project application submitted during the last 90 business days of a regulatory year could not be recovered until the second regulatory year that commences after the application is submitted.

Contingent project applications would continue to be prevented from being submitted in the last 90 business days before the end of a regulatory control period. This is because there are no remaining years of the regulatory control period in which revenue can be adjusted.

The consultation paper seeks stakeholder input on these proposed changes.

Submissions to the rule change request are due by 4 April 2019.

Background

At the COAG Energy Council meeting on 19 December 2018, Ministers discussed and agreed on an approach to deliver the priority transmission projects identified in the Australian Energy Market Operator’s Integrated System Plan (ISP) as soon as possible, including rule changes to streamline regulatory processes. Subsequent to that meeting, the potential for clause 6A.8.2(b)(1) to delay implementation of some of the priority ISP projects was identified by stakeholders.

Expedited process

As this rule change request is considered non-controversial, the AEMC intends to assess the proposed rule under the expedited rule making process unless we receive a written request and substantive reasons not to do so from any person by 21 March 2019

Under an expedited rule making process, a final rule determination must be made within eight weeks of the initiation of the process.

As a result, the key dates for stakeholders in this process are:

  • Commencement of this rule change process: 7 March 2019
  • Submissions to the consultation paper due (4 weeks):  4 April 2019
  • Publication of final determination: by 2 May 2019
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Documentation